FountainBlue is pleased to share notes from previous SV High Tech Entrepreneurs' Forum. Special thanks to our facilitators for the forums as well as our generous sponsors DLA Piper <> , Silicon Valley Bank <> , Merrill Lynch <> and Kirkpatrick & Lockhart <> .
You are welcome to comment on any of the notes below by e-mailing us at info@FountainBlue.biz or joining us for our upcoming forums - on the second Mondays of the month from 11:30 a.m. - 1:30 p.m. for the High Tech Entrepreneurs. You are also welcome to join FountainBlue's Entrepreneurs' mailing list at for invitations to future events.
FountainBlue's May 18 High Tech Entrepreneurs' Forum was on the topic of An Investor's Eye's View on High Tech Funding.
In January, FountainBlue gathered a panel of angels to share their perspectives on funding. In March, we gathered corporate investors to share their perspectives on how to best partner with them. For this event, we featured prominent investors in the valley, each with a different specialty area within the high technology industry, and asked them to share their perspective on trends, and their advice to early stage high tech entrepreneurs regarding securing venture funding. Our panel included:
Facilitator, Linda Prowse Fosler, Prowse-Fosler and Associates
Panelist Clint Chao, Formative Ventures
Panelist Vish Mishra, Clearstone Ventures
Panelist Sajal Srivastava, TriplePoint Capital
Panelist Richard Simoni, Asset Management Company
Panelist Ted Wang, Fenwick & West
Below is a compilation of advice for your reference.
Qualities of a CEO
CEOs drive everything from the top down
As a startup CEO, consider carefully your funding sources, and ensure that the relationship is solid, that you will get along. Consider the positive and negative qualities and traits.
Consider your own strengths and weaknesses and be transparent about communicating it to your funders. Work strategically with your funders to build a team which compliments your strengths and supplements your weaknesses.
CEOs must be brilliant and visionary strategists who can execute and deliver the first product/service that fits that vision.
CEOs are also the first and primary sales and business development person.
CEOs are passionate, persistent and determined.
Successful companies have CEOs who think critically about the needs of their companies and know how they fit their own skills and abilities to make that company succeed, even if it's not in the role of CEO.
CEOs are resourceful, bringing together the resources and connections to help company to succeed.
Successful CEOs know when and how to change the business model, based on the needs and interests of the customers/the market.
Successful CEOs get guidance from others more experienced than they are, and can pull out the kernels of wisdom so they improve.
Traits of Successful Companies:
Successful companies look for a big problem to solve.
They are global, with sustainable business model to grow from micro to multi-national in scope.
Successful companies are creative with marketing, go to market strategy, sales, etc., but not with corporate structure, stock and vesting agreements, etc., (Those entrepreneurs who focus too much on the stock valuation are less likely to stay and profit from the investment.)
Successful companies are positioned to take advantage of inflection points in the market.
Successful companies show that they have customers (or potential customers) who really care about the product/service you're providing, care enough to pay for it.
Successful companies are poised to take advange of a 'step function' jump in the market, positioned to be a market leader in a business that's going to boom (like You Tube). They can then successfully be the 'pace car', setting the industry direction, collecting the bulk of the market share.
Successful companies gather market data that is reliable and unbiased.
What You Should Know About Funders:
Angels are not the panacea to your funding challenges. In fact, some angels are not as professional as VCs, have their own ideas, and may take longer to close a deal.
Venture capitalists are not the bad guys (all the time). Before working with one, understand that from their prospective, they need to make returns for their investors. You must have a big idea that's scalable, have a large total addressable market, have defensible IP, and be able to deliver in order for your company to be worthy of investment.
FountainBlue's April 9 High Tech Entrepreneurs' Forum was on the topic of Successful Web 2.0 Consumer Business Models
From our January event, we heard the following about Web 2.0 companies:
Aggregated data makes it easy for people to create rich content collaboratively
Aggregated users in community impacts possible business models for organizations
Investments decisions are more difficult because it's easier to start a company (investments are lower, infrastructure is established so it's cheaper and easier to get, companies are easily replicated) so it's hard to differentiate companies
So what's the buzz and what's the real thing around Web 2.0 solutions? In this FountainBlue High Tech Entrepreneurs' Forum, our facilitator Steve Bengston from PriceWaterhouseCoopers will share some statistics about Web 2.0 investments and successes, and we have also invited several entrepreneurs to tell us about their successful business models.
Facilitator, Steve Bengston, Director, PricewaterhouseCoopers
Panelist Keith Rabois, VP Business and Corporate Development, LinkedIn
Panelist Jeffrey Walker, President and CEO, Atlassian
Panelist Karsten Weide, Program Director, Digital Media and Entertainment, IDC
Panelist Peter Ziebelman, Founder and Partner, Palo Alto Venture Partners
In this session, we helped entrepreneurs to better understand what it takes to grow a successful Web 2.0 company, and the business and partnership opportunities ahead. Below are follow-up notes for your reference.
Below are a summary of remarks on Successful Web 2.0 Consumer Business Models for your reference.
Web 2.0 defined as:
The next wave of internet products/services based on web links/Second coming of the internet
Companies that grow independently and don't require business development relationships with larger, more established companies
The savvy entrepreneur who understands the new opportunities available with the internet - from the growth of the marketplace to the targetting of the audience to funding opportunities, technology tools, funding methods and location flexibility.
Revenue Models for Web 2.0 Companies
Content, including blogs, wikis, communities
Subscriptions
Advertising
Audio and Video Distribution
Mobile Internet
Greatest opportunity as it's anticipated that 2/3s of Americans will be using mobile devices
Advice for successfully marketing your web 2.0 company:
Make a great product/service that addresses the need of a large target audience
Price the product/service attractive, particularly initially as you're gaining traction
Leverage word of mouth marketing, selling to 50 people at a time for example. Continue building momentum on your own.
Partner with the bigger firms to continue gathering momentum where possible. To get that opportunity, remember that there are people running businesses and target the right decision-maker, and sell them based on their interests and needs.
Provide proof for your revenue model concept. Not necessarily substantial sales dollars, but real paying customers who pay for the solution.
Partner with analysts like IDC and Forrester for marketing and PR opportunities where possible. It can help build the buzz and the mindshare.
Actively participate in viral marketing efforts - participating in regular blogs, encouraging others in your community to blog on related topics, etc., Be open, hones, and not self-promoting if you do so.
If you're aiming for advertising dollars for your site, track site usage and understand your target audience. Advertisers will invest in web sites with large volume of visitors and companies who know in detail who those visitors are.
If you're entering a crowded marketplace, you can still succeed with a great product/service, but you must be very strategic and competitive.
Providing software to strategic partners may help build momentum quickly, and also provide ongoing marketing/PR opportunities. Example: Atlassian gave away their software to open source foundation, which continues to generate awareness and interest to their target audience.
If you're seeking funding for your Web 2.0 company:
Show your target market - 500 million dollar market size and more if you're seeking vc funding
Use metrics and show exponential growth, not linear growth, for visitors, customers, dollars.
Show a great team - at least 2-3 executives who 'get it', and are able to grow the company to 10-50 million; not solo technical genius or business development person with mediocre idea
Show that your technology has defensible competitive advantage. It's OK to leverage existing technologies, but you should know what's unique and defensibly yours.
Define your fundable milestones including timelines, making sure that you offer buffer time.
The theme for FountainBlue's March 12 High Tech Entrepreneurs' Forum was on Corporate Investments in High Tech Companies
Converging factors are leading to an increase in corporate investments in high tech companies:
The marked decline in IPOs
The rapid product development cycles, and the corresponding pressure to innovate quickly and well
The increasing costs of internal corporate R&D efforts
And other factors.
We invited several corporate executives to tell us about their internal R&D strategies and how they partner with early stage start-ups to support their overall corporate strategy.
Facilitator, Antony Awaida from StartLeap Corporation, is a corporate executive and serial entrepreneur.
Panelist Lisa Lambert, Managing Director, Intel Capital, Software and Solutions Group
Panelist Cliff Reeves, Emerging Business Team at Microsoft
Panelist Ray Wu, is Director, Strategy and Corporate Development at HP
Entrepreneurs in attendance better understood what it would take to partner with corporate executives in support of their strategic development efforts.
Corporate investors can provide start-ups with:
Access to their presence in local markets around the world.
Creating a broader, more global insights into emerging markets.
Introductions to their larger-company customers, which may be customers to the start-up.
Connections to VC partners.
Grow an ecosystem for development or for technology customers. Example: Microsoft's investment in China.
Strategic investments to accelerate product development, market penetration, etc.,
Start-ups can provide companies with:
Great partnership/M&A opportunities - because of technology, business model, customer base.
Different view/perspective on technologies and business models.
Opportunity to move into new vertical markets, particularly useful when the new markets are a logical extension of existing ones.
Entrepreneurs may find it easier in some ways and more difficult in other ways to launch a business:
It's no longer necessary to spend a million dollar on hardware and software infrastructure before launching a company and producing a product. With Intel software, open source technologies, and other modern solutions, an investment of 10s of thousands may now be sufficient.
Although there are less financial barriers to launching a business, the marketing and customer acquisition challenges are more severe - no more 'if you build it they will come' philosophy.
Although advanced technology tools make it easier for entrepreneurs to produce new solutions, customers are also more demanding about having quality, integrated products and packaging, delivery etc., become more important.
There are more investment monies, more experienced investors, and less hype.
There are more experienced entrepreneurs to partner with, but choose your partners carefully.
Our February 16 high tech entrepreneurs' forum was on 'What It Takes to be a Successful Entreperneur' and featured facilitator Steve Adelman of Nexus Partners and our panelists Naveen Bisht, founder/CEO Ukiah Software, currently CEO/founder of Nayna Networks; Mike Grossman, co-founder/CEO LiveCapital, currently CEO, Tempo Payments, Inc.; Chuck Haas, co-founder Covad, currently CEO and co-Founder of MetroFi; and Wendy York-Fess, co-founder MarketSmart, President Electric Minds, currently VP of Operations with IMMI.
Below are comments and advice on becoming a successful entrepreneur from our panel, and the collective wisdom of the audience.
Decide on whether you are naturally an entrepreneur
Would you rather have a regular, predictable paycheck with a boss or not know where the next dollar is coming from, and not having a boss?
Do you dislike the routine, silo-ism, political battles which take place in some larger corporations or would you prefer the uncertain future of start-ups?
Do you like making a larger impact, being rewarded for innovation? If so, can you find that in a corporate setting or do you need to have an entrepreneurial setting?
Do you enjoy the responsibility of success and the responsibility of failure?
Focus more on what you're passionate about and whether it is a learning/growing opportunity for you than on making a lot of money
With that said, choose an opportunity in a disruptive industry, where there is a potential for a big win!
Consider other external variables like market trends and directions.
Characteristics of successful companies might include:
Having a good team with complementary skills; being realistic about everyone's abilities, including your own; being self-aware about everyone's ability and how everyone is working together
Have a pathologically relentlessness drive to succeed, going around, through, across obstacles
Be highly adaptable to change and nimble with your business model to take advantage of opportunities through changing conditions
Strategically narrow the focus for the organization
Luck/Timing are important. Prepare the other pieces to take advantage of opportunities brought on by good luck and good timing.
Great Leadership: Passion, Communication, Integrity, Focus on doing what's right for the company, even if you're standing alone; persistence, etc.,
Our 1/8 High Tech Entrepreneurs' Forum was on the topic of high tech investment trends, featuring
panelists: Marc Burch; Steve Bennet, Sand Hill Angels; Clifford Tong, Keiretsu Forum; Ben Wan; and Ron Weissman, Band Of Angels with Q&A moderated by Steve Bengston from PriceWaterhouseCoopers and Fred Greguras from Fenwick & West.
Below are some big-picture take-aways from the meeting:
Trends in 2007:
M&A will continue to grow at a faster pace then 2006. Private equity will play a larger role along with hedge funds.
Biotech funding in Q3 received more VC funding then Software for the first time. Software funding in Q3 for deals was the lowest since 1996.
Job market will be good for the next six months. Look for a job now as fed is concerned about inflation and I don't see the fed changing the rates until Q3.
IPO will continue to be weak / non existence.
"Green" is in! Record funding in all areas: Some examples:
- Energy generation (ethanol) $200 m in funding for Cilion.
- Energy storage (fuel cells) $102 m in Ion America
- Energy infrastructure (electricity efficiency) $130 m Current Comm
Prop 77 funding will move forward as the final lawsuits get dismissed. $300 m a year for the next 10 years. Many embryonic and life science project will receive funding grants. San Francisco / San Diego will receive the largest grants.
China / India VC funding will accelerate. Many VC's are opening offices there.
Software as a service / open source / Linux trends will continue.
Mobile web will be hot. Many new services / devices / applications being developed.
Political climate has changed in Washington. Homeland security grants are at risk of being eliminated / reduced.
Web 2.0 comments:
Aggregated data makes it easy for people to create rich content collaboratively
Aggregated users in community impacts possible business models for organizations
Investments decisions are more difficult because it's easier to start a company (investments are lower, infrastructure is established so it's cheaper and easier to get, companies are easily replicated) so it's hard to differentiate companies
Comments on trends in funding of IT companies
For the first time since 2000, IT investments are on the rise. However, the buyers are selective about their vendors, leaning toward fewer vendors from larger, established firms
Companies are leaning toward integrated solutions
Advice on getting funding
Build traction and momentum - product, customers, partners, team etc.,
The more you have built up, the more likely you will get funding
Be just as strong in business development as you are with technology - develop channel, co-development, OEM partnerships and results-oriented sales teams rather than senior VPs of sales focused on building customers in 18-month cycles
Build relationships with investors - they would be more likely to invest in you, and coach you in getting your company funded
Aiming for M&A as an exit:
Companies such as Yahoo and Google will continue to search for good ideas and quality talent => Build your company, build traction (not just about building the technology, also about business development and partnerships)
FountainBlue was pleased to host a High Tech Entrepreneurs' Forum on Alternative Funding Options for High Tech Entrepreneurs on Monday, November 13, 2006. Featured panelists included Dirk Michels, Partner, KLN&G; Jake Schwarz, Partner, KLN&G; and Ed Lambert, Senior VP, Bridge Bank.
Below is a Summary of Notes and Advice for early stage, pre-Series A, seed funding, drawn on the wisdom of our facilitators and each of you as participants.
There is a lot of venture money right now, but in general entrepreneurs need to have a beta test, prototype or product launch in order to be fundable.
To achieve the beta test, prototype, product launch phase, entrepreneurs need a first level of funding. Alternative funding options include: Credit Cards, Friends & Family, Home Equity Loans, SBA Loans, Purchase Order Financing
If your company survives that level, the next lefl of financing includes: Grants, Forums, Contests
At all times, encourage organic growth and bootstrapping to continue to grow the business. Not only will your successes in organic growth and bootstrapping successes look good for your fundraising efforts, your very successful efforts might even overcome the need to raise money
One option for raising money is through customer orders. If choosing this option:
Make sure that you don't become a contract engineering firm rather than a product development and distribution firm (e.g. don't let the customers get in the way of delivering your business objectives),
Protect your IP
Leverage your connections and previous successes. Your track record and connections will increase your likelihood of getting funding.
When you're ready to seek outside funding from angels and other sources, have a concise executive summary:
See Bill Joos' (previously from Garage.com) Nine Points on creating a compelling summary
See SVASE's 10-slide PowerPoint slide template
Our theme for the October 9 meeting was Building an Effective Executive Team and our guest facilitators were Linda Usoz, Partner in Corporate and Employment Law at Kirkpatrick & Lockhart and Kurt Amundson, a consultant who has served as COO and CFO for a series of high tech firms across the Silicon Valley. Linda and Kurt and the entrepreneurs in attendance offer the following suggestions on Building an Effective Executive Team for Early Stage Companies.
It's About the People
Do the research to ensure that people are who they seem to be/say they are
Working with a successful team with positive history working together is a good indicator for success and will more likely get the funding and support sought
Create clear milestones, roles and objectives with related consequences/options
A detailed job description may help you with your negotiations and communications and help you before more flexible in signing on and growing your executive team
Invest the time to create the right executive team member for your start-up
It's about competence, passion, culture and fit
It's about having the right people on your team at the right time, preferably people who can scale with your organization as it grows
Communicate your expectations on roles, milestones, rewards, responsibilities clearly and in writing and up front
Every start-up needs business expertise as well as technical expertise
If someone objectives to the thorough due diligence in investigating a fit in the organization, perhaps he/she is not the right person for your organization
Strategies for hiring the right person at the right time
One way to plan for the growth of the organization is to not give inflated titles to people who sign on early. This way you have the option of promoting them or hiring someone over them as you grow the company
Hire an interim executive to cover immediate needs while also investigating executives' long-term fit in the organization
If you're faced with founders who need to be re-assigned within the organization, it's best to be clear up front about milestones, roles, objectives while communicating clearly the needs of the organization. Get board involvement. Get everyone invested in the long-term success of the business, de-emphasizing the inevitable ego-struggle it would take a founder to step down from senior executive positions.
Our theme for the August 14, 2006 meeting was on Successful Revenue Models, and it was facilitated by Steve Adelman of Nexus Partners and Jake Schwarz of Kirkpatrick and Lockhart. Below are words of advice from the collective wisdom of the entrepreneurs in attendance and also from Steve and Jake.
Customize revenue models based on market, customer, product and other criteria
Be flexible, and ready to shift gears from one model to another, based on your strategic objectives
Example: you might need to work with initial clients and offer attract pricing models, but if you think creatively and strategically, you could identify what's working and what's not and move from one revenue model to another without losing your initial client base
Pay special attention to the needs of the customer
Example: Your target client may have signing authority for just up to $10K, and planning your pricing strategy around that requirement may help strategically drive revenues
Example: Understand not just what your best customers are buying and the patterns of their purchases, but also what the customers in the middle of the spectrum are requesting. Is it replicable and sustainable? Is it just the major customers purchasing one-time products or services? Would customers in a similar industry require the same product/service? Asking these questions will help shape the revenue model and drive the sales, marketing and fundraising strategy.
Different industries and different companies have different revenue model needs - time frames, development cycles, production challenges etc., impact which revenue models become successful.
A revenue model reflects how much you understand your market, your customers, your products, your competition, etc., and how clearly you are thinking through these questions.
Most start-ups won't have Google's infrastructure-enabler play.
Don't bank on the advertising revenue model based on eye-balls and traffic.
There's no substitute for momentum. If you have that, everything else falls into place.
When doing revenue projections, consider a bottom-up rather than top-down approach. Explaining what you are successfully doing now and mapping the course for success over specific time frames is a much more attractive approach than describing the overall and total market size and the percentage you think you could secure, based on factors such as team, product, etc.,
Notes from the 7/10/06 High Tech Entrepreneurs' Forum:
Atlassian generates 25% in quarterly growth with high margins have hinged on an unconventional approach that de-emphasizes selling. The Atlassian story is how to capture 4,000 customers without outside funding and without a sales force. Some secrets of their success are below:
Founders are entrepreneurial Renaissance sales people (see below) with technology, marketing, management, sales expertise
Profitable from the beginning
Transparent communication with partners and customers
Public posting of pricing information
Issue-Tracking Wiki/blog with developers talking about bugs in their own product
Aggressive/attractive pricing
Simplifying processes
Generate word-of-mouth marketing
SEO and Natural Search, some Google advertising
Leverage the community you're targeting. Continue communicating with your target community through wikis, blogs, e-mail, etc.,
Donate software/product to open source community (if appropriate)
Donate to nonprofits
Other sales tips for startups:
Prioritize what you're selling to what market. What's the low-hanging fruit? Are you chasing something that makes sense? Who are the top 10, 25, 50, 100 customers? Do a segmentation analysis of them.
Product/Service/Solution must offer a great value to a market in need. Think critically about the value of your solution and then prioritize who you would be selling what to. Otherwise the sales won't happen.
Talk to customers and prospects about their needs and what they think of your product/service.
Don't be intimidated by going into a crowded market with many competitors. But DO make sure that you have a quality product/service and a clear competitive edge.
Set the expectations/objectives for the sales staff based on the stage of development for the organization. For early stage companies, you might be more interested in a 'renaissance sales person' than the more traditional 'producers'.
The Renaissance Sales person is: technical, can stand alone, can roll out his/her own collateral, is more entrepreneurial, etc.,
Sales is important at all levels and stages of a company.
Visit for a blog on starting a start-up.
Consider engaging outsourced sales people. It may not be cheaper than hiring a full-time sales person, but it may generate good results.
Having independent telemarketing consultants might be worthwhile, but consider the employment, security, IP and other issues first, particularly the attention paid to the way information is communicated to outsourced consultants and how they communicate to their contacts.
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Notes from the 6/12/06 High Tech Entrepreneurs' Forum:
Sales and Marketing Questions
When should you shop the plan around?
CEO's role as 'cash extraction officer'
If you need monies, you need 1) a hot idea, but there are few of those; 2) demonstrate traction; 3) on track and productive
Plan is precise (a layman can grasp the concepts); compelling (right technology, right stage, right advisers/team); and complete (marketing/revenue strategy)
Get 'friendly fire' - experience people who will give you candid input so that you make mistakes to them and improve before going to potential funders
Consider the purpose of the plan: is it for technical people, for planning your development, for funding
Develop a capital acquisition plan so you know how much money you should get from where, what type of funding, and how long it would take to get funding
Shop to 6-10 funders strategically
Resources:
Mighty Ventures web site
Art of the Start, Guy Kawasaki
How do you convert the buzz to clients?
Ask for the business: approach opportunities strategically, know what to ask for and when, provide a compelling value proposition
How do you build the buzz?
Consider what's working in consumer-based deals
Prosper.com's strategy is to give 500 shares of stock to community-builders with clear, tangible and specific deliverables regarding traffic/results
Consulting Questions
How do you productize a service?
Repeatable process/methodology
Use a junior person to implement
Charge a flat fee for the basics and charge for add-on features
Create results, harness them and communicate them/sell using them
How do you build momentum
Consider using a contract commission-only sales staff. They do the due diligence on your market/product or service evaluation.
Use PRLeads.com to declare yourself an expert in a particular field or also to get your articles published in different publications
Follow the business plan to build momentum
The other side of the coin is to be flexible about the business plan if the plan isn't working as you expected
Develop strategic alliances
How much time should consultants spend doing business development and how much time for running/doing the business?
Several times a week for biz dev/sales staff, perhaps a few times a month for CEO
Try out a bunch of different networking venues and see what attracts your target customer
Network with the perspective that you are helping others to get ahead, and they often come back to help you
Do passive networking . . . Network with people you might meet in non-business settings
Funding Questions
VolunteerMatch.com got funding from Foundations
SBA loans
SBIR Government loans
Grants.gov
Factoring invoices
Christine speaks on 'How to Create a Successful Business Plan,' Thursday, August 31, 6 - 8 p.m. at Solano College SBDC, 424 Executive Court North, Suite C in Fairfield
Technology
Location-based services and privacy questions
Read the People's Republic of Desire if you're planning on targeting Chinese market
See SustainableLifeMedia.com to see digital media trends in technology
Our theme for the June 7 Entrepreneurs' Workshop was on Creative Funding Options for the Enterprising Entrepreneur, facilitated by Martin Kan from Silicon Valley Bank. Below are notes and suggestions for your reference.
Ask yourself some thought-provoking questions before seeking funding. What you are going to do will bias how much funding you will seek and from whom by when. (e.g. a fabless chip company may require a multi-million-dollar investment while a web-based company may require far less)
Be conservative about the amount of time and money you will need - estimate high
If you don't seek enough money for example, you may find yourself in desperate need of cash, and the 'center of gravity' from shift from you as the entrepreneur to the funder
If you don't allocate enough time to get the funding, you may have to make do with far less money until the funding comes through, and the financial burden may force your hand
Do some market research to determine how receptive are about your idea and the space in general
When doing the research, peel back the onion. Don't just investigate which got company funded by whom, but also why did they get the funding. Was it the technology? The management team? Domain expertise? User base? Strong revenue ramp-up? This information will shape how you build the company prior to funding, how much funding to seek and who to seek funding from.
Have a plan B if you don't get the funding you're seeking - is it a bridge loan? An asset-based line of credit? Founders? Friends, Family? Angels? Corporate investment?
If you seek funding and get turned down, take the opportunity to learn from the experience. Ask for specific feedback on why. When gaps are identified, ask the prospective funder if they know someone who can fill the gap.
Notes from the 5/18/06 Meeting:
IP Issues
The inefficient patent system and expensive legal system adds another layer of difficulty for entrepreneurs
As a general rule of thumb for mitigating IP risks, an entrepreneur can:
Maintain information on who contributed which ideas when on time-stamped documents
Retain your personnel, particularly when they have contributed to the IP knowledge in the company
Keep others from discovering your IP
Get educated on difference between trademarks, trade secrets, copyrights, patents etc., , .
When considering IP protection, identify and focus on protection only for the elements of the business or technology that are absolutely essential to success.
Consult with trusted legal resources, including the attorneys at Kirkpatrick & Lockhart - a small investment up front to create an inventor assignment and a consulting agreement between founders, (perhaps a $1-$3K plus investment, 3 hour meeting time and 3-5 hour plus investment) especially if IP is involved may be an extremely practical, proactive way to mitigate the IP loss risks going forward.
Funding/VC Questions
VCs are much more interested in the entrepreneurs' ability to execute a plan than their ability to manage risk and plan/protect themselves (e.g. a patent by itself would not get an entrepreneur funded)
Bill Joos' Nine Points
Allow for Pitch Delay - Start at the end
Be Brief
Bait the Hook - Get them interested before reeling them in
Give high, stay high - Give the big picture benefits, don't go into the details too soon
Obey the 12-15 rule - About a dozen slides in fifteen minutes
Change People's Pulse
Understand Your Audience, who you're pitching to, and pitch accordingly
Ensure Smooth Transitions
Pitching is Attitude, Don't Give Up!
VCs are moving from the 'steroids and vitamins' funding model and are more seeking 'painkillers'
Be careful not to negotiate too aggressively (dilution agreements, percentage of stock, etc.,) when joining as a member of the management team. The focus should be on building the right company well and quickly, not the exit strategy for you personally.
Building an A-Team
Don't compromise on integrity, attitude or maturity
Key indicators of success: integrity, passion and perseverance
Leverage your board of advisers - they could be window dressing, help you make the right business decisions and the right connections. They are also potential funders
Be clear when setting expectations for your board of directors in terms of time commitment and where and how and how often you need their help
Marketing Notes
Blogs are the newest effective marketing thing
Identify your target market and make sure your marketing and business development is focused on that market
Notes from the 4/20/06 Meeting:
Companies that Flip
Build the company traction - with a team, with a product/service, with sales/revenues and the opportunities (including the one to flip) will come to you
People with the objective of flipping a company will not have the enthusiasm, passion, drive, dedication as other entrepreneurs and may therefore be less likely to succeed
Your risk-tolerance level will help you decide whether to join a company that intends to flip. Most companies don't get to flip, and the ones that do will have you looking for the next opportunity pretty quickly anyway.
Focusing too much on 'when to flip' may be de-focusing on building the business
Alternatives to Early Angel Funding
Debt Financing like home equity loans
(an eBay for person-to-person lending)
Distributors/Suppliers (Relationship Based)
Customers (!)
Caution: protect your IP
Sales & Marketing
Many companies go from Feature-Driven (Product) to Customer-Driven (Sales) to Market-Driven, when they maybe should be focused the other way around - Market-Driven to Sales-Driven to Feature-Driven.
Many different aspects of marketing to consider
Must integrate sales and marketing at all points of development
Guerrilla Marketing can be done inexpensively
PRLeads.com for opportunities to provide quotes for journalists ($99/month)
Google Key words
Lead Generation and Qualification are important - See
What's the 'New New'?
Converging Media (Internet, phone, TV)
Infrastructure
Security
Delivery
Data Organization and Access (for real estate, healthcare, and other data-rich industries)
Mobile Wireless - Layers of Apps & Services needed, carriers are the gatekeepers in US, Asia and Europe are ahead